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India, Spain sign 10-year deal

India on Tuesday signed an investment promotion and protection agreement with Spain to inject new dynamism into the economic relations between the two countries.

The agreement, which will act as a major catalyst for investment flow between the two countries, was signed by Finance Minister P Chidambaram and Spanish Deputy Prime Minister and Minister of Economy and Finance Rodrigo Rato at a simple ceremony in New Delhi.

The ten-year agreement provides for encouraging and creating favourable conditions for investors and according fair and equitable treatment to investment in each other's country. Each government is required to accord most favoured nation status treatment and national treatment to investments and MFN treatment to investors.

The agreement is expected to infuse new dynamism to Indo-Spanish economic relations. India has signed similar agreements with most of the European countries.

The agreement also stipulates that nationalisation or expropriation shall not be resorted to, except in the public interest in accordance with the law on a non-discriminatory basis and on payment of compensation.

It also provides for free transferability for investments and returns thereon. An elaborate dispute resolution mechanism is to be set up for settlement of disputes between an investor and the host government, as well as between the two governments.

The agreement has a provision relating to the entry and movement of non-citizens in relation to an investment made in that country by an investor of the other country. The agreement can be terminated before 10 years after giving one year's written notice.